Congressional decisions, or lack thereof, could spell doom for the future of private practice.
Congress did not act to eliminate a 3.37% Medicare fee cut scheduled to take effect Jan. 1. Damn them. As I'm writing this it is Jan. 24, and they still have not acted. The end of private practice as we know it just got closer.
Most of us old-timers know that Medicare was set up in the early 1960s with good intentions. Its funding was predicated upon seniors living ‘X’ years past 65. The ‘X’ has changed, with seniors living much longer, but the funding formula has not really been revised to reflect such. We have medications, procedures, testing, and technologies that did not exist in the ‘60’s. The ratio of folks paying into Medicare to those getting Medicare has shifted, with fewer folks paying in relative to the number of Medicare recipients. These factors combine into a quagmire in desperate need for a long-term fix. But long-term fixes are not popular in Congress, given bipartisan gamesmanship and the negative impact of any long-term decisions on re-elections.
Every Fall, Medicare announces a cut to the Part B fee schedule.T he lobbying begins. Most years, the cut is reversed. When the ‘fix’ is delayed, as may happen this year, the government will spend millions of dollars correcting payments. It’s a broken system.
I am a proponent of private practice. I love it. I believe in it with my heart. Yet I am tired of beating my head against the writing on the wall. Unless some stability is added quickly to Medicare’s Part B funding, private practice may be obsolete in a decade.
Medicare’s 2024 Part B cut
Medicare has cut Part B reimbursement by 3.37%. That’s a top line cut. At 50% overhead, the bottom-line impact is 6.74%, if expenses are held in check. If expenses go up by the same 3.37%, the bottom-line impact is 10.11%. Maintaining a private practice when this threat is an annual one is daunting.
Like hospitals, private practice has seen an influx in the underinsured with the success of the Affordable Care Act (ACA). It’s been wonderful for getting more folks to see doctors, get medications, and take better care of themselves. However, this influx of lower-reimbursing patients has created an unfortunate conundrum. There’s a finite number of appointment slots. Living under the cloud of Medicare cuts, should physicians limit the number of ACA patients they take on to protect their practices’ stability? If ACA enrollment and Medicare cuts force private practices to trim, who gets the trim? It’s easy to say from the physician, unless if you are the physician.
Accountable Care Organizations, I’ve known a few. With every success we’ve had in our ACOs, two things have happened. First, the bar for shared savings keeps getting higher and less attainable. Second, the risk equation keeps tilting, so that failure to meet the higher savings targets results in the accountable care organizations (and their physician members) being on the financial hook for the shortcoming. The risks keep going up, the targets keep getting harder, and the potential rewards keep shrinking. That’s a recipe for an exodus from private practice.
The answers are not easy, and the stress of living under this uncertainty year after year is cumulative. I know, I lived it for nearly three decades. I lived through PhyCor’s rise and fall, through hospital’s buying and subsequent selling of medical practices. I see private equity buying practices at an increasing rate. I see United Healthcare through its Optum division quietly becoming the employer for 1 of every 15 doctors in the US. It’s scary.
Like the Lorax with his trees, I have stood for private practice during my career. I still believe, with all my heart, it’s where the real magic and the best care happens.
I don’t have the answers. I don’t see a happy path forward for private practice. I wish I did, but like many of my physician friends have espoused, we’ve fought a long and good fight, but the time for fighting is nearing its end. Unless the playing field is leveled and given some stability, private practice faces a difficult and uncertain future.
Lucien W. Roberts, III, MHA, FACMPE is a semi-retired practice administrator and long-time writer for Physicians Practice and Medical Economics. In his semi-retired kind of life, he is fortunate to be part of an infusion center with a simple measure of success: one happy patient at a time.